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Today's Oil and Gas Update - Cabot Energy, Canadian Overseas and Trinity

Published: 20:38 13 Nov 2017 AEDT

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Headlines
•  Published:
o Cabot Energy (LON:CAB) - Factsheet
• In Brief:
o Canadian Overseas (LON:COPL)– 0.95p/C$0.02) – LB-13 Change of Heart & Financing Folly
o Trinity (LON:TRIN) – 18p) – What a Difference a Year Makes
Published Today
Cabot Energy*** (LON:CAB) - Factsheet: Cabot Energy (“CAB” or the “Company”) has interests in a number of asset areas, the principal of which is its Canadian production operations in Alberta. Current Gross production stands at ~800bpd (600bpd net to CAB’s 75% Working Interest). The Canadian operations provide the company with further growth opportunities, both in the form of appraisal and development of known productive formations, and as a consolidator of regional production and infrastructure. While SPA has yet to complete a detailed DCF valuation on each asset and publish an Initiation Research Report, Recommendation and Target Price.
In Brief
• Canadian Overseas– LB-13 Change of Heart & Financing Folly: Today’s announcement is anodyne in its content, save for the fact that the Company has had a change of heart with respect to its participation in the LB-13 exploration permit (Liberia) and the financing plans for the ShoreCan JV, which holds its interest in the OPL229 licence in Nigeria. On the former, it isn’t that they have exited LB-13, it’s the timing, as to our mind it raises questions as to what the Management team is actually thinking about its asset base. This is further exacerbated by the fact that the Company is seeking structured finance to fund its appraisal programme. We believe that the Company is better served to drill the first appraisal well using equity, hopefully delivering sufficient cash flow from the test to cover the well costs, and go some way to meeting the costs of the 3 other appraisal wells that are mooted as part of this plan. Once that is complete, it is at that point that the JV should seek development funding, which will include structured credit. While this could arguably be a statement of Management’s confidence in the asset, to raise any credit against the first appraisal well arguably exposes shareholders to excessive risk, as if it fails to deliver as anticipated, the funds would be withdrawn and the asset being taken as security.
• Trinity  – What a Difference a Year Makes: Today’s update from the Company has underlined the change in fortunes that TRIN has experienced, from the edge of bankruptcy to what now appears to be a future more within its control, than not. Make no doubt that the Company has been saved by what was then a current liability to the tax authorities (they come top in any liquidation), but Management have seized on the circumstances to put themselves in what is an increasingly strong position. While there is a long way to go, these initial steps are highly encouraging.

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